Public Notice: Final Rule Adopted Under s. 186.118 (3) (b), Stats.

Minnesota, Illinois and Iowa have not adopted a rule on this subject, but they have enacted statutes comparable to s. 186.118 authorizing state-chartered credit unions to exercise the same incidental powers that federally-chartered credit unions may exercise. See 205 Ill. Comp. Stat. 305/65; Iowa Code s. 533.301.25; Minn. Stat. s. 52.04 subdiv. 3. Michigan added acceptance of secondary capital accounts by low-income designated credit unions as an incidental-power activity preapproved for its credit unions by administrative order.

8.   Summary of factual data and analytical methodologies:

In 2018, when it first adopted Wis. Admin. Code DFI-CU ss. 75.03 (1) and 75.04 (1) authorizing the acceptance of secondary capital in accordance with then-existing 12 C.F.R. s. 701.34, the Office of Credit Unions determined that this incidental power would be useful for eligible credit unions, without creating substantial new risks to their overall safety and soundness.

The Office has monitored activity under this rule in the years since it was issued as part of its routine examinations of low-income designated state-chartered credit unions, and it has not found any cause to revise those conclusions.

In January 2022, within 30 days of the changes in federal law described in section 5 above – namely the introduction of the concepts “subordinated debt” and “grandfathered secondary capital” for federally chartered credit unions – the Office of Credit Unions reviewed the provisions of 12 C.F.R. Part 702, subpart D, as well as applicable state law, and determined that these incidental powers enjoyed by federally-chartered credit unions would also be useful for eligible state-chartered credit unions, without creating substantial new risks to their overall safety and soundness.

9.   Place where comments are to be submitted and deadline for submitting:

Kim Santos, Director, Office of Credit Unions, PO Box 14137, Madison, WI 53708-0137. Tel. [phone]; e-mail [e-mail]. There is no deadline for submitting comments.

10.   Agency contact person:

Kim Santos, Director, Office of Credit Unions, PO Box 14137, Madison, WI 53708-0137. Tel. [phone]; e-mail [e-mail].

TEXT OF RULE

SECTION 1. DFI-CU 75.03 (1) is repealed.

SECTION 2. DFI-CU 75.03 (9m) and (14m) are created to read:

DFI-CU 75.03 (9m) “Grandfathered secondary capital” has the meaning set forth in 12 C.F.R. s. 702.402.

(14m) “Subordinated debt” has the meaning set forth in 12 C.F.R. s. 702.402.

SECTION 3. DFI-CU 75.04 (1) is repealed.

SECTION 4. DFI-CU 75.04 (9r) and (14r) are created to read:

DFI-CU 75.04 (9m) Grandfathered secondary capital.

(14m) Subordinated debt.